Former Trump trade rep says Canada will have ‘happy’ outcome from U.S. tariff policy

Prime Minister Justin Trudeau, right to left, Foreign Affairs Minister Chrystia Freeland, United States Trade Representative Robert Lighthizer, President of the United States Donald Trump, Mexico's Secretary of Economy Ildefonso Guajardo Villarreal, and President of Mexico Enrique Pena Nieto participate in a signing ceremony for the new United States-Mexico-Canada Agreement in Buenos Aires, Argentina, Friday, Nov. 30, 2018. THE CANADIAN PRESS/Sean Kilpatrick (Sean Kilpatrick/THE CANADIAN PRESS)

U.S. President Donald Trump’s former trade representative Bob Lighthizer says Canada will “benefit” from the United States’ current attempt to overhaul trade around the world – while also claiming the relationship between the two countries “is not fraught,” despite trade tensions.

“If the president is right, and if it works out the way it should work out, we will find ourselves with a manufacturing renaissance in America,” Lighthizer said at the Canada Strong and Free Network conference in Ottawa late Friday in a fireside chat with Mark Mulroney.

“It’s impossible for me to believe that that could happen and that Canada wouldn’t benefit,” he said, later adding that “the outcome for both the United States and for Canada is going to be a very happy one.”

CTV News obtained audio of Lighthizer’s remarks, which were closed to the media. The annual conference brings together voices that support Canada’s conservative movement.

Like Trump, Lighthizer – who was the architect of the commander-in-chief’s trade policy during his first term in office and led the U.S. negotiation for the Canada-U.S.-Mexico Agreement (CUSMA) in 2017 and 2018 – insists tariffs are needed to address trade deficits with other countries.

“We have to get to the point where the United States moves towards balanced trade,” Lighthizer said when asked by Mulroney about the volatile market reaction and global recession concerns sparked by Trump’s trade approach.

“There’s a million ways to look at this, but the economies of most of the world are growing because of our trade deficit, and that can’t go on forever.”

On Wednesday – just days after imposing them – Trump announced an immediate 90-day pause on levies against the nations slapped with the highest duties under his “reciprocal” tariff regime, but a baseline 10 per cent tariff remains in place for many countries, excluding Canada and Mexico.

China, meanwhile, is not exempt and has since raised its retaliatory tariff on U.S. imports to 125 per cent after the U.S. imposed duties on Beijing that now total 145 per cent.

Canada-U.S. relationship ‘will be fine:’ Lighthizer

Despite the tensions between Canada and U.S. in the wake of Trump’s tariff policy, Lighthizer says the relationship “is not fraught” and he believes the two countries can move forward and recover.

“I think in the final analysis, the relationship between the United States and Canada is going to be as good or better than it has ever been, and the business relationship will be fine,” he said.

The subject of Trump’s repeated references to Canada as a 51st state was only briefly raised during the conversation. Former prime minister Justin Trudeau has said Trump wants to use economic force to crush Canada’s economy and ultimately take the country over. Mulroney at one point states Canada’s sovereignty was mildly attacked, “if not directly.” Lighthizer did not directly address the issue.

While Canada is exempt from Trump’s global reciprocal tariffs, the U.S. has imposed a punishing 25 per cent levy on foreign-made automobiles, of which Canadian vehicles will be exempt until the U.S. administration “establish(es) a process” to tax exclusively the non-American vehicle components of CUSMA-compliant products.

Levies on steel and aluminum — which took effect on March 12 — are also in place.

A 25 per cent tariff on all Canadian imports and 10 per cent on Canadian energy and potash — which are purportedly related to border security — are also in effect on all non-CUSMA-compliant goods.

Canada had responded to Trump’s tariffs by imposing a 25 per cent tariff on $60 billion worth of U.S. goods, along with similar tariffs on vehicles imported from the United States. But unlike the American duties, Canada’s tariffs will not affect auto parts.

The federal government has said retaliatory measures will remain in place until the U.S. lifts all of its tariffs on Canadian products.

Lighthizer suggests excluding Mexico from free trade talks

When asked whether Canada should be “viewed as an exception” to Trump’s tariff policy due to its close security and economic ties with the U.S., Lighthizer responded, saying the free trade agreement between the two countries “is more valuable than it was six weeks ago.”

“I would suggest that the vast majority of your trade will qualify (under CUSMA),” Lighthizer said. “You can still single out steel, aluminum. I’m not going to argue with that, but the rest of the economy is probably going to be better off.”

Asked what advice he would give to the next prime minister of Canada when dealing with the U.S., Lighthizer said he would renegotiate the free trade deal “sooner rather than later” and suggested leaving Mexico out.

“It should be the United States and Canada trying to stop China and other places from coming in and taking advantage of this market. There’s a big issue which is Chinese investment in Mexico that has to be addressed, and the Canadians ought to be on the American side of that issue,” Lighthizer said.

“The reality is that we talk about (CUSMA) as if it was one agreement, but it really isn’t. It’s an agreement between the United States and Mexico, one between the United States and Canada, and there’s not that much trade that doesn’t involve the United States. It’s just a tiny fraction of the amount of trade is directly between Mexico and Canada, so I would be on our side,” he added.

A joint review of CUSMA is currently set for 2026.

Conservative Leader Pierre Poilievre has pledged to accelerate the renegotiation of CUSMA, while Liberal Leader Mark Carney says he will begin talks for a “new economic and security relationship” after the election. NDP leader Jagmeet Singh has called into question the value of renegotiation when the U.S. has contravened the deal already with its tariffs.

With files from CTV News’ Spencer Van Dyk